Negotiating a Preferential Trading Agreement

Negotiating a Preferential Trading Agreement

Issues, Constraints and Practical Options

Edited by Sisira Jayasuria, Donald MacLaren and Gary Magee

Presenting a blend of economics and law, this book provides unique insights as well as practical guidance for negotiators considering major issues on the agendas of bilateral and regional preferential trading agreements (PTAs).

Chapter 6: Services in PTAs – Donuts or Holes?

Philippa Dee and Christopher Findlay

Subjects: asian studies, asian urban and regional studies, business and management, international business, economics and finance, international business, international economics


1 Philippa Dee and Christopher Findlay INTRODUCTION There are at least four ways of assessing the services provisions of preferential trade agreements (PTAs): ● ● ● ● evaluating the rules; evaluating the commitments made under those rules; evaluating the extent to which the commitments constrain or change the status quo, given that there can be large gaps between bound and applied protection in the areas of both services and investment; evaluating whether any change to the status quo has economic significance. Those who have evaluated the services provisions of preferential trade agreements according to the first two criteria have tended to see ‘donuts’. Those who have evaluated them according to the second two criteria have tended to see ‘holes’. The purpose of this chapter is to outline some of the evidence according to the four methods of evaluation, and to spell out the implications for the likely effects of an Australia–China preferential trade agreement. EVALUATING THE RULES The standard way of evaluating the trading rules established by the services provisions of preferential trade agreements (PTAs) is to compare them to the rules established by the General Agreement on Trade in Services (GATS) under the WTO. The GATS imposes one key discipline on all services trade – the mostfavoured nation obligation. This requires a country to treat the services suppliers of all other countries equally. There is to be no discrimination among the various different foreign sources of services. Beyond that, there 97 98 Sector-specific issues are two other key disciplines that apply on a...

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